Akero Therapeutics Inc.
11/07/2025 | Press release | Distributed by Public on 11/07/2025 16:10
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with our financial statements and accompanying footnotes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. See "Special Note Regarding Forward-Looking Statements." Because of many factors, including those factors set forth in the "Part II, Item 1A., Risk Factors" section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Overview
We are a clinical-stage company dedicated to developing transformational treatments for patients with serious metabolic diseases marked by high unmet medical need, including metabolic dysfunction-associated steatohepatitis, or MASH, formerly known as non-alcoholic steatohepatitis, or NASH. MASH is a severe form of metabolic dysfunction-associated steatotic liver disease, or MASLD, formerly known as nonalcoholic fatty liver disease, or NAFLD, characterized by inflammation and fibrosis in the liver that can progress to cirrhosis, liver failure, cancer and death. Our lead product candidate, efruxifermin, or EFX, is an analog of fibroblast growth factor 21, or FGF21, which is an endogenously expressed hormone that protects against cellular stress and regulates metabolism of lipids, carbohydrates and proteins throughout the body. We have an ongoing, global Phase 3 program called SYNCHRONY, which is comprised of three clinical trials (Outcomes, Histology, and Real-World) with an expected total enrollment of about 3,500 patients, which is designed to support applications for marketing approval for patients with pre-cirrhotic MASH (F2-F3) and compensated cirrhosis (F4) due to MASH. The SYNCHRONY program builds on two biopsy-based Phase 2b trials in corresponding patient populations, with a combined total of over 300 patients treated for up to 96 weeks. Based on the statistically significant reversal of cirrhosis and fibrosis regression among patients with either biopsy-confirmed compensated cirrhosis (F4) due to MASH or pre-cirrhotic MASH (F2-F3) observed in our Phase 2b clinical trials, we believe EFX has the potential, if approved, to be an important medicine for treating MASH.
Results from five randomized, double-blind, placebo-controlled clinical trials evaluating EFX have been reported, and across all trials reported to date a total of 385 adult patients with either MASH and/or type 2 diabetes have been treated with EFX and evaluated for up to 96 weeks. An additional 66 healthy volunteers or patients with severe hepatic impairment were evaluated in open label, single-dose clinical pharmacology studies.
In January 2025, we reported preliminary topline week 96 results from SYMMETRY, a Phase 2b trial that evaluated the efficacy and safety of EFX in patients with biopsy-confirmed compensated cirrhosis (F4), Child-Pugh Class A, due to MASH. At week 96, among patients with baseline and week 96 biopsies (n=134), 39% of patients treated with 50mg EFX (n=46) (p=0.009) experienced reversal of cirrhosis with no worsening of MASH, compared to 15% for placebo (n=47). On May 9, 2025, The New England Journal of Medicine published an article on the SYMMETRY results titled, "Efruxifermin in Compensated Liver Cirrhosis Caused by MASH" (N Engl J Med 2025;392:2413-2424).
In March 2024, we reported preliminary topline week 96 results from HARMONY, a Phase 2b trial that evaluated the efficacy and safety of EFX in patients with pre-cirrhotic MASH, fibrosis stage 2 or 3 (F2-F3). The trial previously met its primary endpoint of ≥1 stage improvement in fibrosis with no worsening of MASH after 24 weeks of treatment for both the 50mg EFX (41%) and 28mg EFX (39%) dose groups, compared to 20% for the placebo arm. At week 96, the response rates on this endpoint increased to 75% (p<0.001) for 50mg EFX and 46% (p=0.07) for 28mg EFX, compared to 24% for placebo.
EFX has been reported to be generally well-tolerated across clinical trials of EFX to date. Most adverse events, or AEs, were mild or moderate. Diarrhea, nausea and vomiting as well as injection site reactions were generally the most common AEs. Treatment-emergent AEs leading to discontinuation through each study's primary analysis period have been low, ranging from less than 5% in patients with F1-F3 MASH to less than 10% in subjects with compensated cirrhosis due to MASH (F4).
Enrollment for a multi-trial, global Phase 3 program called SYNCHRONY began in the fourth quarter of 2023. The Phase 3 SYNCHRONY program consists of three trials, SYNCHRONY Outcomes, SYNCHRONY Histology, and SYNCHRONY Real-World. SYNCHRONY Outcomes is a two-cohort trial evaluating EFX for treatment of patients with compensated cirrhosis (F4), Child-Pugh Class A, due to MASH. SYNCHRONY Histology is a two-cohort trial evaluating EFX for treatment of patients with pre-cirrhotic MASH, fibrosis stage 2 or 3 (F2-F3). SYNCHRONY Real-World is evaluating EFX for treatment of patients with MASLD or MASH (F1-F4, compensated). In January 2025, we announced the completion of enrollment of the double-blind portion of SYNCHRONY Real-World. Results from the SYNCHRONY Real-World trial are expected in the first half of 2026.
In five separate clinical trials in patients with MASH and/or type 2 diabetes, EFX has been observed to reverse fibrosis, resolve steatohepatitis, and help restore healthy metabolism to the whole body. Consequently, we believe EFX holds the potential to be an important medicine for treatment of MASH, if approved. We also believe EFX may be able to be used in combination with other therapies for potentially greater effect in certain subpopulations, particularly among the substantial proportion of patients with both MASH and type 2 diabetes who are expected to be treated with GLP-1 therapeutics to manage their diabetes and/or obesity.
We were incorporated in January 2017 and have devoted substantially all of our efforts to organizing and staffing our company, business planning, raising capital, in-licensing rights to EFX, research and development activities for EFX, building our intellectual property portfolio, exploring pipeline expansion opportunities, and providing general and administrative support for these operations. Since our initial public offering ("IPO") in June 2019, we have raised capital primarily through the sale of our common stock in follow-on public offerings, registered direct offerings and ATM offerings. We have incurred significant operating losses since inception. Our ability to generate product revenue as a standalone company in the event that the merger with Novo is not completed that is sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of EFX, if approved, and any future product candidates. Our net losses were $81.6 million and $72.7 million for the three months ended September 30, 2025 and 2024, respectively. Our net losses were $252.1 million and $151.8 million for the years ended December 31, 2024 and 2023, respectively. As of September 30, 2025, we had an accumulated deficit of $1,049.0 million.
If the merger with Novo is not completed, we expect to continue to incur significant expenses for at least the next several years as we advance EFX through later-stage clinical development, develop additional product candidates and seek regulatory approval of any product candidates that complete clinical development. In addition, if we obtain marketing approval for any product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.
If the merger with Novo is not completed, we may also incur expenses in connection with the in-licensing or acquisition of additional product candidates. As a result, we would need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we could generate significant revenue from product sales, if ever, we would expect to finance our operations through the sale of equity, debt financings, or other capital sources, which may include collaborations with other companies or other strategic transactions. In that event, we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If the merger with Novo is not completed and we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.
Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability if the merger with Novo is not completed. In that event, even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of September 30, 2025, we had cash, cash equivalents, short-term and long-term marketable securities of $988.3 million.
Agreement and Plan of Merger
On October 9, 2025, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Novo and NN Invest Sub, Inc., a Delaware corporation and a direct or indirect wholly-owned subsidiary of Novo ("Merger
Sub"), providing for the merger of Merger Sub with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Novo.
At the effective time of the Merger (the "Effective Time"), each share of Company common stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares and Dissenting Shares (as defined in the Merger Agreement)) will automatically be cancelled and converted into the right to receive (i) cash in an amount equal to $54.00, without interest thereon and subject to any applicable tax withholdings and (ii) one contingent value right (a "CVR") representing the right to receive $6.00 in cash, without interest and subject to any applicable tax withholdings, if a specified milestone is achieved, pursuant to the CVR Agreement (as defined in the Merger Agreement).
Consummation of the Merger is subject to customary closing conditions, including, without limitation, the absence of certain legal restraints preventing or otherwise making illegal the consummation of the Merger, no Material Adverse Effect (as defined in the Merger Agreement) with respect to the Company having occurred since the date of the Merger Agreement that is continuing, the expiration or termination of any waiting periods under Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") applicable to the Merger, the obtainment of any clearance or approval applicable to the Merger under the antitrust and foreign direct investment laws of other applicable foreign jurisdictions, and the adoption of the Merger Agreement by holders of Company common stock representing at least a majority of the outstanding Company common stock.
The parties expect the Merger and the other transactions contemplated by the Merger Agreement to close around year end. Following completion of the Merger, the Company common stock will no longer be publicly listed.
The Merger Agreement contains certain termination rights for the Company and Novo. If the Merger Agreement is terminated under certain specified circumstances, the Company will be required to pay Novo a fee of $165.0 million. If the Merger Agreement is terminated under other specified circumstances, Novo will be required to pay the Company a fee of $185.0 million.
Components of our results of operations
Revenue
We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products in the near future, if at all. If our development efforts for EFX or additional product candidates that we may develop in the future are successful and result in marketing approval or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.
Operating expenses
Research and development expenses
Research and development expenses consist primarily of costs incurred in connection with the development of EFX, as well as unrelated discovery stage program expenses. We expense research and development costs as incurred. These expenses include:
•
employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions;
•
expenses incurred under agreements with CROs that are primarily engaged in the oversight and conduct of our clinical trials; CMOs that are primarily engaged to provide drug substance and product for our clinical trials, research and development programs, as well as investigative sites and consultants that conduct our clinical trials, nonclinical studies and other scientific development services;
•
the cost of acquiring and manufacturing nonclinical and clinical trial materials, including manufacturing registration and validation batches;
•
costs related to compliance with quality and regulatory requirements; and
•
payments made under third-party licensing agreements.
Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.
Product candidates in later stages of clinical development, such as EFX, generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our planned clinical development activities in the near term and in the future. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of EFX and any future product candidates.
Our clinical development costs may vary significantly based on factors such as:
•
per patient trial costs;
•
the number of sites included in the trials;
•
the countries in which the trials are conducted;
•
the length of time required to enroll eligible patients;
•
the number of patients that participate in the trials;
•
the number of doses that patients receive;
•
the drop-out or discontinuation rates of patients enrolled in clinical trials;
•
potential additional safety monitoring requested by regulatory agencies;
•
the duration of patient participation in the trials and follow-up;
•
any setbacks or delays to the initiation or completion of preclinical or non-clinical studies, product development or clinical trials;
•
the cost and timing of manufacturing our product candidates, including on account of any disruption or delays to the supply of our product candidates;
•
the phase of development of our product candidates; and
•
the efficacy and safety profile of our product candidates.
The successful development and commercialization of product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:
•
the timing and progress of nonclinical and clinical development activities;
•
the number and scope of nonclinical and clinical programs we decide to pursue;
•
the ability to raise necessary additional funds;
•
the progress of the development efforts of parties with whom we may enter into collaboration arrangements;
•
our ability to maintain our current development program and to establish new ones;
•
our ability to establish new licensing or collaboration arrangements;
•
the successful initiation and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority;
•
the receipt and related terms of regulatory approvals from applicable regulatory authorities;
•
the availability of drug substance, drug product, and delivery devices utilized in the production of our product candidate;
•
establishing and maintaining agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidate is approved;
•
our ability to obtain and maintain patents, trade secret protection and regulatory exclusivity, both in the United States and internationally;
•
our ability to protect our rights in our intellectual property portfolio;
•
the commercialization of our product candidate, if and when approved;
•
obtaining and maintaining third-party insurance coverage and adequate reimbursement;
•
the acceptance of our product candidate, if approved, by patients, the medical community and third-party payors;
•
competition with other products;
•
the impacts of a pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, on the supply of our product candidate and ability to successfully initiate and complete preclinical and non-clinical studies
and clinical trials, to receive regulatory approval for our product candidate and to commercialize our product candidate, if approved; and
•
a continued acceptable safety profile of our therapy following approval.
A change in the outcome of any of these variables with respect to the development of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates.
General and administrative expenses
General and administrative expenses consist primarily of salaries, related benefits and stock-based compensation expense for personnel in executive, finance, corporate and business development, and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax and administrative consulting services; insurance costs; administrative travel expenses; marketing expenses and other operating costs.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support development of EFX and our continued research activities. We also anticipate that we will incur increased accounting, audit, legal, tax, regulatory, compliance, and director and officer insurance costs, as well as investor and public relations expenses associated with maintaining compliance with exchange listing and SEC requirements.
Interest expense
Interest expense consists primarily of interest expense on our term loan with Hercules, which was repaid in full on September 23, 2025.
Other income
Other income consists primarily of interest income earned on our cash, cash equivalents and short- and long-term marketable securities.
Results of operations
Comparison of the three months ended September 30, 2025 and 2024
The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024:
|
Three Months Ended |
||||||||||||||||||||
|
September 30, |
||||||||||||||||||||
|
2025 |
2024 |
$ Change |
% Change |
|||||||||||||||||
|
(in thousands, except percentages) |
||||||||||||||||||||
|
Operating expenses: |
||||||||||||||||||||
|
Research and development |
$ |
78,883 |
$ |
72,232 |
$ |
6,651 |
9 |
% |
||||||||||||
|
General and administrative |
11,353 |
9,471 |
1,882 |
20 |
% |
|||||||||||||||
|
Total operating expenses |
90,236 |
81,703 |
8,533 |
10 |
% |
|||||||||||||||
|
Loss from operations |
(90,236 |
) |
(81,703 |
) |
(8,533 |
) |
10 |
% |
||||||||||||
|
Interest expense |
(1,092 |
) |
(1,246 |
) |
154 |
(12 |
) |
% |
||||||||||||
|
Loss on Extinguishment of Loan Payable |
(1,557 |
) |
- |
(1,557 |
) |
n/a |
||||||||||||||
|
Interest and other income, net |
11,319 |
10,244 |
1,075 |
10 |
% |
|||||||||||||||
|
Net loss |
$ |
(81,566 |
) |
$ |
(72,705 |
) |
$ |
(8,861 |
) |
12 |
% |
|||||||||
Research and development expenses
The following table summarizes our research and development expenses for the three months ended September 30, 2025 and 2024:
|
Three Months Ended |
||||||||||||||||||||
|
September 30, |
||||||||||||||||||||
|
2025 |
2024 |
$ Change |
% Change |
|||||||||||||||||
|
(in thousands, except percentages) |
||||||||||||||||||||
|
Research and development expenses: |
||||||||||||||||||||
|
Direct EFX program expenses |
$ |
70,213 |
$ |
65,186 |
$ |
5,027 |
8 |
% |
||||||||||||
|
Personnel and other R&D related expenses |
8,670 |
7,046 |
1,624 |
23 |
% |
|||||||||||||||
|
Total research and development expenses |
$ |
78,883 |
$ |
72,232 |
$ |
6,651 |
9 |
% |
||||||||||||
Research and development expenses were $78.9 million and $72.2 million for the three months ended September 30, 2025 and 2024, respectively, an increase of $6.7 million. Direct costs for our EFX program increased $5.0 million, attributed primarily to a $5.5 million net increase in CRO expenses for our ongoing clinical trials. Expenses for our Phase 3 SYNCHRONY program increased $8.2 million as that program advanced, while expenses for our Phase 2b SYMMETRY and HARMONY clinical trials decreased $2.7 million as those trials were winding down. Personnel and other research and development related expenses increased $1.6 million, including a $0.9 million increase in wage and wage-related expenses resulting from increased staff and a $0.8 million increase in stock-based compensation. We expect that our research and development expenses will increase substantially in the near term and in the future, due to planned manufacturing and clinical development activities necessary to support the ongoing development of EFX.
General and administrative expenses
General and administrative expenses were $11.4 million and $9.5 million for the three months ended September 30, 2025 and 2024, respectively, an increase of $1.9 million, attributable to a $0.2 million increase in wage and wage-related expenses, a $1.0 million increase in stock-based compensation and $0.7 million increase in legal and other third-party professional services.
Interest expense
Interest expense for the three months ended September 30, 2025 and 2024 was $1.1 million and $1.2 million, respectively, related to the Hercules term loan.
Loss on Extinguishment of Loan Payable
Loss on Extinguishment of Loan Payable for the three months ended September 30, 2025 was $1.6 million, related to the repayment in full of the Hercules term loan on September 23, 2025.
Interest and other income
Interest and other income, net were $11.3 million and $10.2 million for the three months ended September 30, 2025 and 2024, respectively, an increase of $1.1 million, resulting primarily from investment earnings on the $402.5 million that we raised from a follow-on public offering in January 2025.
Comparison of the nine months ended September 30, 2025 and 2024
The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024:
|
Nine Months Ended |
||||||||||||||||||||
|
September 30, |
||||||||||||||||||||
|
2025 |
2024 |
$ Change |
% Change |
|||||||||||||||||
|
(in thousands, except percentages) |
||||||||||||||||||||
|
Operating expenses: |
||||||||||||||||||||
|
Research and development |
$ |
217,704 |
$ |
178,204 |
$ |
39,500 |
22 |
% |
||||||||||||
|
General and administrative |
34,287 |
29,194 |
5,093 |
17 |
% |
|||||||||||||||
|
Total operating expenses |
251,991 |
207,398 |
44,593 |
22 |
% |
|||||||||||||||
|
Loss from operations |
(251,991 |
) |
(207,398 |
) |
(44,593 |
) |
22 |
% |
||||||||||||
|
Interest expense |
(3,418 |
) |
(3,468 |
) |
50 |
(1 |
) |
% |
||||||||||||
|
Loss on Extinguishment of Loan Payable |
(1,557 |
) |
- |
(1,557 |
) |
n/a |
||||||||||||||
|
Interest and other income, net |
34,170 |
28,830 |
5,340 |
19 |
% |
|||||||||||||||
|
Net loss |
$ |
(222,796 |
) |
$ |
(182,036 |
) |
$ |
(40,760 |
) |
22 |
% |
|||||||||
Research and development expenses
The following table summarizes our research and development expenses incurred during the nine months ended September 30, 2025 and 2024:
|
Nine Months Ended |
||||||||||||||||||||
|
September 30, |
||||||||||||||||||||
|
2025 |
2024 |
$ Change |
% Change |
|||||||||||||||||
|
(in thousands, except percentages) |
||||||||||||||||||||
|
Research and development expenses: |
||||||||||||||||||||
|
Direct EFX program expenses |
$ |
192,068 |
156,648 |
$ |
35,420 |
23 |
% |
|||||||||||||
|
Personnel and other R&D related expenses |
25,636 |
21,556 |
4,080 |
19 |
% |
|||||||||||||||
|
Total research and development expenses |
$ |
217,704 |
$ |
178,204 |
$ |
39,500 |
22 |
% |
||||||||||||
Research and development expenses were $217.7 million and $178.2 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $39.5 million. Direct costs for our EFX program increased $35.4 million, attributed primarily to a $11.4 million increase in CMO expenses to meet anticipated EFX product demand and a $23.6 million net increase in CRO expenses for our ongoing clinical trials. Expenses for our Phase 3 SYNCHRONY program increased $28.8 million as that program advanced, while expenses for our Phase 2b SYMMETRY and HARMONY clinical trials decreased $5.2 million as those trials were winding down. Personnel and other research and development related expenses increased $4.1 million, including a $2.6 million increase in wage and wage-related expenses resulting from increased staff and a $2.4 million increase in stock-based compensation and a $0.9 million decrease in other R&D related expenses. We expect that our research and development expenses will increase substantially in the near term and in the future, due to planned manufacturing and clinical development activities necessary to support the ongoing development of EFX.
General and administrative expenses
General and administrative expenses were $34.3 million and $29.2 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $5.1 million, attributable to a $0.7 million increase in wage and wage-related expenses, a $2.2 million increase in stock-based compensation and a $2.2 million increase in legal and other third-party professional services.
Interest expense
Interest expense for the nine months ended September 30, 2025 and 2024 was $3.4 million and $3.5 million, respectively, related to the Hercules term loan.
Loss on Extinguishment of Loan Payable
Loss on Extinguishment of Loan Payable for the nine months ended September 30, 2025 was $1.6 million, related to the repayment in full of the Hercules term loan on September 23, 2025.
Interest and other income
Interest and other income, net were $34.2 million and $28.9 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $5.3 million, resulting primarily from investment earnings on the $402.5 million that we raised from a follow-on public offering in January 2025.
Liquidity and capital resources
On October 9, 2025, the Company announced that the Company entered into the Merger Agreement with Novo and Merger Sub. In the Merger Agreement, we have agreed to various covenants, including, among others, agreements to conduct our business in the ordinary course consistent with past practice in all material respects during the period between the execution of the Merger Agreement and the Effective Time. Outside of certain limited exceptions, we may not take, authorize, or agree or commit to take, certain actions without Novo's consent, including, but not limited to: (i) acquiring businesses and disposing significant assets; (ii) incurring capital expenditures above specified thresholds; (iii) issuing equity; (iv) incurring indebtedness; and (v) repurchasing or paying dividends on ordinary shares. We do not believe these restrictions will prevent us from being able to fund our operations, working capital needs or capital expenditure requirements.
We have incurred significant operating losses from our inception through September 30, 2025. We have not yet commercialized any products and we do not expect to generate revenue from sales of products for several years, if at all, if the merger with Novo is not completed and we remain independent. Since our IPO in June 2019, we have raised capital primarily through the sale of our common stock in follow-on public offerings, registered direct offerings and At-the-Market, or ATM, offerings. In January 2025, we raised gross proceeds of $402.5 million from a follow-on public offering of our common stock and pre-funded warrants and $10.6 million through the sale of common stock under an ATM offering.
From our inception through September 30, 2025, these and other funding sources have provided gross proceeds totaling $1,910.4 million. As of September 30, 2025, we had cash, cash equivalents short and long-term marketable securities of $988.3 million. We have invested our cash resources primarily in liquid money market accounts, U.S Treasuries and agency securities, commercial paper and corporate debt securities.
The following table summarizes our cash flows for the periods indicated:
|
Nine Months Ended |
||||||||||
|
September 30, |
||||||||||
|
2025 |
2024 |
|||||||||
|
(in thousands) |
||||||||||
|
Net cash (used in) operating activities |
$ |
(183,081 |
) |
$ |
(163,017 |
) |
||||
|
Net cash (used in) investing activities |
(346,062 |
) |
(124,980 |
) |
||||||
|
Net cash provided by financing activities |
364,937 |
369,855 |
||||||||
|
Net (decrease) increase in cash and cash equivalents |
$ |
(164,206 |
) |
$ |
81,858 |
|||||
Cash flows from operating activities
Cash used in operating activities for the nine months ended September 30, 2025 was $183.1 million, consisting of a net loss of $222.8 million offset by non-cash charges of $21.5 million, including $27.1 million of stock-based compensation expense, a $1.6 million loss on extinguishment of debt related to the term loan with Hercules and $7.8 million in amortization of premiums and discounts on our marketable equity securities, and changes in our operating assets and liabilities of $18.3 million. The changes in operating assets and liabilities were primarily due to the timing of prepayments and payments to our CMOs and CROs for ongoing clinical trial and manufacturing activities.
Cash used in operating activities for the nine months ended September 30, 2024 was $163.0 million, consisting of a net loss of $182.0 million offset by non-cash charges of $14.6 million, including $22.5 million of stock-based compensation expense, and changes in our operating assets and liabilities of $4.4 million. The changes in operating assets and liabilities were primarily due to the timing of prepayments and payments to our CMOs and CROs for ongoing clinical trial and manufacturing activities.
Cash flows from investing activities
Cash used in investing activities for the nine months ended September 30, 2025 was $346.1 million, resulting from $732.5 million in purchases of short-term and long-term marketable securities offset by $386.4 million of short-term marketable securities which matured.
Cash used in investing activities for the nine months ended September 30, 2024 was $125.0 million, resulting mainly from $436.3 million in purchases of short-term and long-term marketable securities offset by $312.3 million of short- and long-term marketable securities which matured.
Cash flows from financing activities
Cash provided by financing activities for the nine months ended September 30, 2025 was $364.9 million, including primarily $378.4 million from a follow-on public offering of our common stock and pre-funded warrants in January 2025, $10.4 million from sales of our common stock under our ATM sales agreement, and $13.7 million in proceeds from the exercise of stock options, offset by $37.4 million for the repayment of the term loan to Hercules.
Cash provided by financing activities for the nine months ended September 30, 2024 was $369.9 million, including primarily $344.8 million from a follow-on public offering of our common stock, $10.6 million from sales of our common stock under our ATM sales agreement, $10.0 million from a term loan provided by Hercules, $4.9 million in proceeds from the exercise of stock options and $0.3 million in proceeds from issuance of common stock pursuant to employee stock purchase plan purchases.
Funding requirements
Our future funding requirements will depend on the outcome of the proposed merger with Novo.
Our primary uses of capital are, and we expect will continue to be, research and development services, compensation and related expenses and general overhead costs. We expect to continue to incur significant expenses and operating losses for the foreseeable future. In addition, since the closing of our IPO, we have incurred and expect to continue to incur additional costs associated with operating as a public company. We anticipate that our expenses will increase significantly in connection with our ongoing activities. The timing and amount of our operating expenditures will depend largely on:
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if and when the proposed Merger with Novo is consummated;
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the initiation, progress, timing, costs and results of nonclinical studies and clinical trials for EFX or any future product candidates we may develop;
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timing delays, if any, with respect to preclinical and clinical development of EFX or any future product candidates we may develop as a result of a pandemic, epidemic or outbreak of an infectious disease, or from the impact of geopolitical tensions;
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our ability to maintain our license to EFX from Amgen;
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the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities, including the potential for such authorities to require that we perform more nonclinical studies or clinical trials than those that we currently expect or change their requirements on studies or trials that had previously been agreed to;
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the cost to establish, maintain, expand, enforce and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with licensing, preparing, filing, prosecuting, defending and enforcing any patents or other intellectual property rights;
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the effect of competing technological and market developments;
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market acceptance of any approved product candidate, including product pricing, as well as product coverage and the adequacy of reimbursement by third-party payors;
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the cost of acquiring, licensing or investing in additional businesses, products, product candidates and technologies;
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the cost and timing of selecting, auditing and potentially validating a manufacturing site for commercial scale manufacturing;
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the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval and that we determine to commercialize; and
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our need to implement additional internal systems and infrastructure, including financial and reporting systems.
If the Merger is not consummated, we expect that we will require additional funding to complete the clinical development of EFX, commercialize EFX, if we receive regulatory approval, and pursue in-licenses or acquisitions of other product candidates. If we receive regulatory approval for EFX or other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on whether we choose to commercialize EFX ourselves.
If the Merger is not consummated, until we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If the Merger is not consummated and we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Contractual obligations and other commitments
On October 9, 2025, the Company entered into the Merger Agreement with Novo and Merger Sub. If we are unable to satisfy certain closing conditions under the Merger Agreement, or if other mutual closing conditions are not satisfied, Novo will not be obligated to complete the Merger. Under certain circumstances detailed in the Merger Agreement, we could be required to pay Novo a termination fee of $165.0 million.
During the nine months ended September 30, 2025, there were no material changes outside the ordinary course of business to our contractual obligations and commitments from those disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part II, Item 7, in our Annual Report on Form 10-K for the year ended December 31, 2024.
Non-cancelable purchase and other arrangements increased to $90.7 million as of September 30, 2025, compared to $25.6 million as of December 31, 2024, which is primarily attributable to an increase in purchase obligations that support our clinical trial and product manufacturing activities.
Critical accounting policies and estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with United States generally accepted accounting principles. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies are described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations- Critical Accounting Policies and Significant Judgments and Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2024 which was filed with the Securities and Exchange Commission on February 28, 2025. There were no material changes to our critical accounting policies through September 30, 2025 from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.
Recent accounting pronouncements
See Note 2 to our unaudited condensed consolidated financial statements included in Part I, Item 1, "Notes to Unaudited Condensed Consolidated Financial Statements," of this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our business.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
We are exposed to market risk related to changes in interest rates. We had cash, cash equivalents, short-term and long-term marketable securities of $988.3 million as of September 30, 2025, which consisted primarily of U.S. Treasury-backed securities, corporate debt securities, and money market funds.
The primary objective of our investment activities is to preserve capital to fund our operations. We also seek to maximize income from our investments without assuming significant risk. To achieve our objectives, we maintain a portfolio of investments in a variety of securities of high credit quality and short and long-term duration, according to our board-approved investment policy. Our investments are subject to interest rate risk and could fall in value if market interest rates increase.
A hypothetical 10% relative change in interest rates during any of the periods presented would not have a material impact on our condensed consolidated financial statements.
Foreign Currency Risk
The majority of our transactions occur in U.S. dollars. However, we do have certain transactions that are denominated in currencies other than the U.S. dollar, primarily the Euro and British Pound, and we therefore are subject to foreign exchange risk. The fluctuation in the value of the U.S. dollar against other currencies affects the reported amounts of expenses, assets and liabilities primarily associated with a limited number of manufacturing activities. The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our condensed consolidated financial statements for the nine months ended September 30, 2025 and 2024.
Inflation Risk
Although we do not believe that inflation has had a material effect on our business, financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates continue to rise) due to an impact on the costs to conduct clinical trials, manufacturing and supply costs, labor costs we incur to attract and retain qualified personnel, and other operational costs. Inflationary costs could adversely affect our business, financial condition and results of operations.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2025. Disclosure control and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of September 30, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the nine months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.
PART II-OTHER INFORMATION

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